Carpooling is legal in New South Wales. Full stop. There is no law in NSW — or anywhere in Australia — that prohibits two or more people sharing a car journey and splitting the cost. It is one of the oldest and most ordinary forms of transport cooperation in existence.
But people ask this question a lot, and for understandable reasons. The rise of rideshare regulation, the complexity of transport licensing laws, and general uncertainty about what "commercial" driving means have created genuine confusion. This article sets out exactly what the law says, where the lines are drawn, and how Herdy operates within them.
The key distinction: cost-sharing vs commercial transport
NSW transport law distinguishes between two very different things:
- Cost-sharing carpooling — a driver shares the cost of a journey they are already making with one or more passengers. Legal, no licence required, no permit required.
- Commercial passenger transport — a driver is paid to take passengers somewhere, making a profit from the activity. Requires specific licensing under the Point to Point Transport (Taxis and Hire Vehicles) Act 2016 (NSW).
Herdy is a cost-sharing platform. Drivers do not profit from rides on Herdy — they recover a share of the actual running costs of a journey they are already making. That is the fundamental legal distinction, and it is a clear one.
What does "cost-sharing" actually mean?
The ATO provides useful guidance here. Its published rate for vehicle running costs is $0.88 per kilometre — a figure that covers fuel, maintenance, tyres, registration, insurance, and depreciation. This is what it actually costs to operate a car.
In a genuine cost-sharing arrangement, the driver recovers some portion of this from passengers — typically the variable costs (fuel, maintenance, tyres) rather than fixed costs (rego, insurance) that exist regardless of whether carpooling occurs. Herdy's pricing structure is designed to reflect this: passenger contributions cover a fair share of variable running costs, not a margin above them.
As long as the total passenger contributions do not exceed the driver's actual costs — and Herdy's structure ensures they don't — the arrangement is cost-sharing, not commercial transport.
What about insurance?
This is the most common concern, and it deserves a direct answer.
Standard comprehensive car insurance policies in Australia cover the driver for personal and social use — which includes carpooling. Carrying a passenger who contributes to fuel costs does not constitute "commercial use" under standard policy terms.
However, policy terms vary between insurers. The prudent approach is to check your specific policy wording. Most major Australian insurers (NRMA, AAMI, Allianz, Budget Direct, etc.) do not exclude cost-sharing carpooling from their personal policies — but it is worth confirming directly with your insurer if you have any doubt.
What is definitely excluded from standard personal policies is operating as an unregistered commercial transport service — charging passengers at a commercial rate and making a profit. Herdy does not do this, and neither do Herdy drivers.
Carpooling is not rideshare. Rideshare is a commercial activity. Carpooling is a cost-sharing arrangement between people who are going the same way. The distinction matters legally and practically.
Does the ATO treat carpooling as income?
Generally, no — as long as the arrangement is genuine cost-sharing.
The ATO's position is that reimbursements for genuine cost-sharing arrangements are not assessable income for the driver. If you are recovering actual costs — not making a profit — the receipts are not taxable.
Where this changes is if the driver is consistently earning more than their actual running costs, or operating in a way that looks like a commercial service. Herdy's platform is designed to prevent this: passenger contributions are set to reflect fair cost-sharing, not commercial pricing.
If you have specific questions about your tax situation, the ATO's website has guidance on ride-sharing and cost-sharing, or consult a tax professional.
What about HOV lanes in NSW?
NSW has High Occupancy Vehicle (HOV) lanes on some motorways that require a minimum of two or more occupants. Carpooling passengers count toward this threshold — meaning regular carpoolers on routes like the M2 or the Eastern Distributor can legitimately use these lanes, saving time on top of saving money.
Does Herdy's pricing keep drivers within legal limits?
Yes. Herdy structures passenger contributions based on driving distance and variable running costs — not a commercial fare. The platform does not allow drivers to set arbitrary prices; contributions are calculated to reflect fair cost recovery.
This means drivers on Herdy are operating in the same legal space as anyone who has ever asked a colleague to chip in for petrol. The difference is that Herdy handles the coordination and the payment automatically, making it frictionless — but the underlying arrangement is the same.
The bottom line
- Carpooling is legal in NSW — no permit, no licence, no special insurance required.
- The key is cost-sharing: drivers recover actual running costs, not commercial profit.
- Standard comprehensive car insurance covers carpooling (check your specific policy to confirm).
- Genuine cost-sharing is not assessable income under ATO guidelines.
- Herdy is designed from the ground up to operate within these parameters.
If you have a specific legal question about your situation, consult a legal professional. But for the overwhelming majority of everyday carpooling arrangements, the answer is simple: it is legal, it is ordinary, and it is something millions of Australians already do every week without a second thought.
